AFTER RAISING taxes last year, Mayor Barry now announces that more tax increases may be forthcoming this year. The city's Public Employee Relations Board recently approved a request by several unions of city workers to bargain with the city on pay. That request was granted, incidentally, even though it came only days before Oct. 1, the first day of the city's new fiscal year. The unions filed the request because the mayor proposes to give them a 5 percent pay increase instead of the 9 percent that the federal workers got.

These labor talks do not take place in isolation. In case you've missed it, the city is in serious financial trouble. The treasury is currently fighting to avoid being swamped by a sea of red ink -- a $409 million deficit -- left over from the last fiscal year. But regardless of all that, the labor unions are saying that they want at least the 9 percent they would have received if the city government were still under the federal civil service system. The difference between that 9 percent pay raise and the 5 percent the mayor offered is $29 million. We might add that it is $29 million that would have to be made up with new taxes.

Raising city taxes again -- the second time in two years -- is just not on. The labor unions are entitled to negotiate the pay raise. But the mayor has no obligation to keep his offer of 5 percent on the table. He should withdraw it and start at zero -- no pay raise. The mayor can then make a strong argument to the Public Employees Relations Board that the city does not have the money necessary to offer more than a 5 percent raise this year without firing more people. The board must understand that the city is not trying to avoid sharing profits with its workers or denying them money that it has hidden. The city is in a financial squeeze, and the squeeze is real.